Different individuals have different financial goals for retirement. Individuals often prepare for retirement by first determining a desired retirement income and then preparing a plan to achieve the desired retirement income. Typically, desired retirement income can be anywhere between 40%-80%, or more, of the pre-retirement income for the life of the individual. Examples of retirement savings vehicles include annuities and life insurance products, among others.
Annuities allow investors to place a certain amount of money in a tax-deferred account in exchange for income in the future. Individuals who need additional income sources during retirement can invest in annuities. An annuity can also be an attractive investment if the customer is looking for a retirement account without contribution limits. Additionally, unlike some retirement accounts, customers are not required to take a minimum distribution from annuities at retirement age.
Life insurance provides a benefit to a policyholder's beneficiaries when the insured dies. Life insurance is needed by individuals to pay for the majority of their family expenses should they die. Life insurance can provide a policyholders' family the ability to pay for the policyholder's funeral expenses and maintain the family's standard of living. For example, a policyholder's family can continue to make mortgage payments and pay household expenses using the proceeds from a life insurance policy death benefit.
Planning for retirement is difficult due to the many seemingly conflicting goals and risks that a retiree faces. Retirees may have accumulated retirement savings well in excess of what is needed to provide for basic spending needs, but may be overly-cautious about spending it too quickly during the early years of retirement. This cautiousness might prevent them from fully enjoying traveling and other activities that are typically associated with the “golden years” of life. Maximizing the benefit from a given set of retirement assets can be difficult, particularly while taking into account a given retiree's tolerance for risk. Additionally, the traditional retirement planning approach often ignores retirement protection often focusing only on retirement funding.
One conventional approach involves the implementation of different tools by insurance companies in order to assess the customer needs in terms of protection for retirement services. Some of those tools may be focused on the level of protection provided to a customer's current financial state and typically addressed with life insurance. Interactive tools can be used for evaluating a customer's potential financial situation during retirement and how life insurance might affect a customer's financial situation. The evaluation of an individual's insurance protection is based on whether the protection is commensurate with the individual's current financial replacement value. However, the existing or conventional approaches and/or tools related to offer insurance protection based on customer needs are not effective or efficient enough.
For the aforementioned reasons, there is a need for an improved system and method to provide the protection needs of retirement services and to determine the cross-selling product capability of current insurance customers.